Getting the Deal Through - United Arab Emirates - Ince & Co

®Shippingin 32 jurisdictions worldwideContributing editor: Jonathan Lux 2010Published byGetting The Deal Throughin association with:Albors Galiano PortalesAli Budiardjo, Nugroho, Reksodiputro, Counsellors at LawAndrade Dias & Associados – Sociedade de Advogados RLAttorneys at law Borenius & Kemppinen LtdBull, Housser & Tupper LLPCabinet Isabelle CorbierChrysses Demetriades & Co LLCCox, Wootton, Griffin, Hansen & Poulos LLPDenlawGarza Tello & Asociados Abogados/AttorneysGTG AdvocatesHaridass Ho & Partners, Advocates & SolicitorsInce & CoInternational Law OfficesLarraín, Rozas, Lackington, Rencoret & Uruzúa Cia LtdaLaw Firm Vukić, Jelušić, Šulina, Stanković, Jurcan & JabukaLaw Offices Carl Kincaid – Mendes Vianna Advogados AssociadosLindahlLogos Legal ServicesMaersk LineMarine Legal ServicesNaschitz Brandes & CoOkabe & YamaguchiPBS Law LimitedRolmax Law Office, ShanghaiSegelken & SuchoparSokolov, Maslov and PartnersStraits Consulting GroupStudio Legale Siccardi Bregante & CThomas CooperVan Steenderen MainportLawyers

contents®Shipping 2010Contributing editor:Jonathan LuxInce & CoBusiness development managerJoseph SamuelMarketing managersAlan LeeDan BrennanGeorge IngledewEdward PerugiaRobyn HetheringtonDan WhiteTamzin MahmoudEllie NotleySubscriptions managerNadine RadcliffeSubscriptions@GettingTheDealThrough.comAssistant editorAdam MyersEditorial assistantNick Drummond-RoeSenior production editorJonathan CowieChief subeditorJonathan AllenSenior subeditorKathryn SmulandSubeditorsAriana FramptonCharlotte StretchEditor-in-chiefCallum CampbellPublisherRichard DaveyShipping 2010Published byLaw Business Research Ltd87 Lancaster RoadLondon, W11 1QQ, UKTel: +44 20 7908 1188Fax: +44 20 7229 6910© Law Business Research Ltd2009No photocopying: copyrightlicences do not apply.ISSN 1759-0744The information provided in thispublication is general and may notapply in a specific situation. Legaladvice should always be sought beforetaking any legal action based on theinformation provided. This informationis not intended to create, nor doesreceipt of it constitute, a lawyer–clientrelationship. The publishers andauthors accept no responsibility forany acts or omissions containedherein. Although the informationprovided is accurate as of September2009, be advised that this is adeveloping area.Printed and distributed byEncompass Print SolutionsTel: 0870 897 3239Introduction Martin A Clausen Maersk Line 3Brazil Godofredo Mendes Vianna Law Offices Carl Kincaid – Mendes Vianna Advogados Associados 4Canada John W Bromley and Michael J Posnikoff Bull, Housser & Tupper LLP 12Chile Ricardo Rozas Larraín, Rozas, Lackington, Rencoret & Uruzúa Cia Ltda 18China Lu Min and Margot Luo Rolmax Law Office, Shanghai 27Croatia Gordan Stanković and Maja DotlićLaw Firm Vukić, Jelušić, Šulina, Stanković, Jurcan & Jabuka 33Cyprus Michael McBride, Yiannis Christodoulou and Michael PapadopoulosChrysses Demetriades & Co LLC 39Denmark Peter Schaumburg-Müller and Mathias Steinø Denlaw 45England & Wales Jonathan Lux with Reema Shour, Anna Fomina and Jams RustambekovInce & Co 51Finland Jan Aminoff and Inkeri Kuuskoski Attorneys at law Borenius & Kemppinen Ltd 60France Isabelle Corbier Cabinet Isabelle Corbier 66Germany Kathrin Janka Riehmer Segelken & Suchopar 72Greece Douglas Bateson and Ioanna Vitta Thomas Cooper 78Hong Kong Max Cross and Angela Yap Ince & Co 83Iceland Einar Baldvin Axelsson Logos Legal Services 92Indonesia M Husseyn Umar, Efendi H Manurung and Sahat A M SiahaanAli Budiardjo, Nugroho, Reksodiputro, Counsellors at Law 99Israel Peter Gad Nashitz Naschitz Brandes & Co 104Italy Francesco Siccardi, Francesca Ronco and Enrica MonzaniStudio Legale Siccardi Bregante & C 108Japan Shuji Yamaguchi Okabe & Yamaguchi 117Latvia Edward Kuznetsov, Julia Kazmina and Diana Kalvane Marine Legal Services 122Malaysia Primila Edward Straits Consulting Group 127Malta Robert Tufigno and Cynthia van der Weerden GTG Advocates 132Mexico Fernando Escamilla and Anais Vivanco Garza Tello & Asociados Abogados/Attorneys 141Netherlands Arnold J van Steenderen, Marieke G van den Dool and Jasper R GroenVan Steenderen MainportLawyers 147Portugal Mateus Andrade Dias Andrade Dias & Associados – Sociedade de Advogados RL 156Russia Mikhail Sokolov, Anna Arkhipova and Sergey Seliverstov Sokolov, Maslov and Partners 166Singapore Ajaib Haridass, V Hariharan and Eddy TengHaridass Ho & Partners, Advocates & Solicitors 172Spain Eduardo Albors, Javier Portales and Alfonso de Ochoa Albors Galiano Portales 180Sweden Erik Linnarsson, Peter Bäverlid, Mark Hallquisth and Christoffer Gramming Lindahl 189Thailand Paiboon Sutuntivorakoon and Dennie Soong PBS Law Limited 196Ukraine Arthur Nitsevych and Nikolay Melnykov International Law Offices 203United Arab Emirates Bob Deering, Brian Boahene, Pavlo Samothrakis, Khalid Hamed,Mona Al Sayegh, Alexandra Bailey and Jacqueline McFadden Ince & Co 208United States Gregory W Poulos and Rupert P HansenCox, Wootton, Griffin, Hansen & Poulos LLP 214LawBusinessResearchwww.gettingthedealthrough.com

United Arab Emiratesince & CoUnited Arab EmiratesBob Deering, Brian Boahene, Pavlo Samothrakis, Khalid Hamed, Mona Al Sayegh,Alexandra Bailey and Jacqueline McFaddenInce & CoAs a general caveat, please note that the UAE is a civil law jurisdiction.Case law does not follow any precedent system and each case isdetermined according to its own facts and arguments put forward.All references to articles are to articles in the UAE Maritime Code(Federal Law No. 26 of 1981), unless expressly stated otherwise.Newbuilding contracts1 When does title in the ship pass from the shipbuilder to theshipowner? Can the parties agree to change when title will pass?The general position under the UAE Maritime Code is that title willpass upon the purchaser’s acceptance of delivery of the vessel afterthe vessel has undergone sea trials, per article 67 of the UAE MaritimeCode. The parties are, however, free to depart from this positionby providing for an alternative regime in their contract. Additionally,article 118 of the Commercial Code, which applies more generally tocommercial activities (of which ship construction forms part), allowsa seller to retain title in moveable goods until the final instalment ofthe purchase price is paid.2 What formalities need to be complied with for the refund guarantee tobe valid?The UAE Maritime Code provides that a shipbuilding contract mustbe in writing so to the extent the refund guarantee forms part of theship building contract, it too must be in writing. It is not necessaryfor the guarantee to be notarised or registered. In practice, all shipbuildingcontracts and associated refund guarantees are evidenced inwriting and signed by the parties.3 Are there any remedies available in local courts to compel delivery ofthe vessel when the yard refuses to do so?As a general point, there is no form of mandatory injunctive reliefunder UAE law. Article 105 of the UAE Commercial Code does howeverpermit a purchaser of goods to seek an order from the court akinto specific performance in the event the yard fails to make delivery ofthe goods after being served with notice by the purchaser. Article 105of the UAE Maritime Code also allows the purchaser to claim, as analternative to seeking an order for delivery of the ship, cancellationof the contract and compensation.4 Where the vessel is defective and damage results, would a claim liein product liability against the shipbuilder at the suit of the shipowner;a purchaser from the original shipowner; or a third party that hassustained damage?Article 68 of the UAE Maritime Code provides that where the purchasertakes delivery of a vessel after it has undertaken sea trials theyard is deemed to have guaranteed that the vessel is free from hiddendefects. However, the UAE Commercial Code provides that incircumstances where there is a hidden defect which is not material,this does not ordinarily entitle the purchaser to cancel the contract.Indeed, article 110 of the UAE Civil Code provides that the purchasercan only avail a contract which concerns the acquisition of moveablegoods if the defect causes the goods to be unfit for their purpose ordifficulty in the disposal of those goods. Article 111 of the UAE CivilCode goes on to provide for the purchaser to give notice of the defectsto the seller within 15 days of actual delivery, and requires the purchaserto commence proceedings to seek a reduction of the purchaseprice, on account of the defect, within 60 days from delivery unlessthe defect is latent, in which case the purchaser must file their claimwithin six months of actual delivery.Ship registration and mortgages5 What vessels are eligible for registration under the flag of yourcountry?Article 18 (1) UAE Maritime Code provides that all vessels are eligiblefor registration under the UAE flag, excluding the following:• vessels designed for fishing, pleasure-cruising or used for commerce,and whose tonnage is not more than 10 tons;• lighters, pontoons, barges, tugs, boats, cranes, dredgers, divingvessels and other floating installations.These vessels may be registered at the request of the owners.6 What are the requirements for company formation?There are numerous corporate structures available in mainlandUAE as well as within the various free trade zones located withinthe UAE.The free zone located at the Jebel Ali Port is the oldest and probablythe most popular free trade zone for maritime clients. Unlikemainland UAE, the Jebel Ali Free Zone Authority (JAFZA) allowsfor 100 per cent foreign ownership, which is often an attractivefeature for foreign investors. Mainland UAE continues to have foreignownership restrictions which for most corporate structures,broadly referred to as LLCs, requires 51 per cent ownership by aUAE national.The Dubai Maritime City (DMC) is a new option for the maritimeindustry, which aims to attract a range of maritime related entitiesinto one business community. The DMC is not itself a free tradezone but it may, on a case-by-case basis, permit investors to operateunder a JAFZA free trade licence within the DMC, which in turnallows for 100 per cent foreign ownership.The two key deciding questions an investor should considerwhen deciding on free zone or non-free zone would be:• if the prospective company will be trading within the UAE a freezone company will probably be inappropriate and an LLC willbe required; and• if the investor wants 100 per cent ownership of the corporate208 Getting the Deal Through – Shipping 2010

Ince & Counited arab emiratesentity an LLC will be inappropriate and a free zone companywill be required. There are albeit certain exceptions availableand in special circumstances, various consents and permits maybe granted which vary the standard position.Once the free zone decision has been made, the business structurewill ordinarily be determined by the business activities, the numberof shareholders and the types of licences the business requires.7 Is dual registration and flagging out possible and what is theprocedure?Dual registration is not permitted under UAE law (article 28). Toregister a vessel, applicants must provide evidence that the vessel wasdeleted from any previous register.All vessels registered in accordance with the UAE Maritime Codeshall only fly the flag of the UAE (article 15). There is therefore, noprocedure for flagging out or dual registration.8 Who maintains the register of mortgages and what information does itcontain?Mortgages are recorded on the Ship Register which is maintained bythe ship registrar in the office of the port where the vessel is registered.The data is also centrally available to the head UAE ship registrarin the UAE Marine Affairs Department, Ministry of Transport.If the vessel is outside the UAE the mortgage may also be recordedwith the UAE state consul. If the vessel is mortgaged while it is beingbuilt, the relevant place in which to record the mortgage would bethe Registration Office of the port where the construction is takingplace.Other than an official copy of the mortgage itself, the informationcontained on the Ship Register regarding the mortgage wouldinclude:• the name, nationality, place of residence and profession of thecreditor and debtor;• date and type of contract;• amount of the debt;• any special conditions;• vessel’s name, description, date of manufacture and registrationnumber (and construction report, if mortgaged whilst being constructed);and• the place chosen by the creditor within the jurisdiction of RegistrationOffice where the entry is made.The UAE Ship Register is a closed register catering only for shipsowned by companies or individuals that are majority UAE-ownedand the information registered against each ship is not easily available.The relevant law relating to ship registration and mortgages isin articles 97-114 of the UAE Maritime Code.Limitation of liability9 What limitation regime applies? What claims can be limited? Whichparties can limit their liability?The UAE ratified the 1976 Limitation of Liability Convention in1997 (LLMC 76). Although the UAE has ratified this conventionit has not yet repealed articles 138-142 the UAE Maritime Code.Therefore doubt remains as to how any given judge would applythe law.Under the UAE Maritime Code, translated article 138 statesthat a shipowner ‘may’ limit his liability in respect of the followingclaims:• the death or injury of any person on board the vessel and alsothe loss or damage of any property on board the vessel;• the death or injury of any other person on board or at sea and theloss or damage of any property or the infringement of any right ifthis results from the offence of any person for whom the owneris responsible whether or not such person is on board the vessel,provided that the offence is connected with navigation or themanagement, loading, transportation or unloading of the vesselor the embarkation, carriage or disembarkation of passengers;and• any obligation imposed by the law connected with the lifting ofshipwrecks or the refloating, lifting or demolition of a sunkenvessel or a vessel which has gone aground or been abandoned,including the contents aboard and any obligation arising fromdamage caused by the vessel to ports’ installations, docks andnavigation lanes.The ability to limit liability under this provision of UAE maritimelaw is therefore at the discretion of the court and is not an automaticentitlement. Local courts have traditionally been reluctant to permitthe limitation of liability. For this article to be considered mandatoryit would need to be incorporated into the contract of carriage.Under the UAE Maritime Code, shipowners, ship charterers andtheir personnel may limit their liability.10 What is the procedure for establishing limitation?Despite the ratification of LLMC 76 and contrary to article 141, theUAE courts do not usually permit shipowners to establish a limitationfund since there is a general opposition to the concept of thelimitation of liability as a whole. If the local court were to permit thesetting up of a limitation fund, this would be calculated on a slidingscale dependent on vessel’s overall tonnage. A shipowner may thenlimit his liability without any evidence of an offence committed onhis part or on the part of the persons for whom he is responsible.Furthermore, if a shipowner chooses to limit his liability it will notbe considered an admission of liability.11 In what circumstances can the limit be broken?A shipowner may not limit his liability when an incident which hasgiven rise to liability is as a result of his personal error. Liabilitiesarising from aid and rescue and the sharing of joint losses (generalaverage) may not be limited and the limitation in respect of liabilitiestoward the shipowner’s crew or personnel or their heirs may not belimited. Additionally, claims arising from nuclear damage and madeagainst the owner of a nuclear vessel may not be limited.Port state control12 Which body is the port state control agency? Under what authoritydoes it operate?The Department of Maritime Inspection may carry out the controland inspection of national and foreign registered vessels (article58(1) and 59). It operates under the authority of the minister ofcommunications.13 What sanctions may the port state control inspector impose?Depending on the breaches, the Department of Maritime Inspectionmay impose the following sanctions:• a six-month imprisonment and/or a fine not exceeding 25,000United Arab Emirates Dirhams (article 64);• a one-month imprisonment and/or a fine not exceeding 5,000United Arab Emirates Dirhams (article 65);• issuing a decree refusing the granting of a seaworthiness licence,or a safety certificate (article 61(1)); or• issuing a decree prohibiting the vessel from sailing or cancellingsuch prohibition stating the reasons thereof (article 61(1)).www.gettingthedealthrough.com 209

United Arab Emiratesince & Co14 What is the appeal process against detention orders or fines?An appeal may be lodged to the minister of communication withinten days of the sanctions being notified. The minister will rule on theappeal within 10 days of receiving the application (article 61(2)).Classification societies15 Which are the approved classification societies?AbbreviationABSBVCCSDNVGLLRRSKRNKRINANameAmerican Bureau of ShippingBureau VeritasChina Classification SocietyDet Norske VeritasGermanischer LloydLloyd’s Register of ShippingRussian Maritime Register of ShippingKorean Register of ShippingNippon Kaiji KyokaiRegistro Italiano Narate16 In what circumstances can a classification society be held liable, if atall?There is no known authority on this issue in UAE law. It is very difficultto anticipate how the UAE court would approach this issue.Collision, salvage, wreck removal and pollution17 Can the state or local authority order wreck removal?Under UAE Maritime Code, the appropriate maritime departmentmay confiscate the wreck of a vessel as security for the cost of itsremoval. In practice, if a wreck is located within port limits, the relevantport management authority will remove the wreck. No federalbody currently exists to cover the issue of wreck removal across allterritorial waters.18 Which international conventions or protocols are in force in relation tocollision, salvage and pollution?Whilst the 1910 Collision Convention has never been formally ratifiedby the UAE, the current provisions contained within the UAEMaritime Code are based on this. The UAE has also acceded to theCollision Regulations 1972. The Collisions at Sea provisions applyto all collisions that occur between two vessels where the damagecaused results from a vessel’s act or omission or failure to observethe National Law or approved international maritime conventions,as applicable. The provisions stipulate that compensation for damageto a vessel or vessels involved in a collision shall be commensuratewith the actual damage caused.The International Convention on Salvage 1989 applies to theUAE and was given the force of law in 1993.The UAE is signatory to the International Convention for thePrevention of Pollution from Ships 1973 as amended by the the 1978Protocol (Marpol 73/78). It is also signatory to the InternationalConvention on Civil Liability for Oil Pollution Damage 1992 (CLC1992) and the Fund Convention 1992.19 Is there a mandatory local form of salvage agreement or is Lloyd’sstandard form of salvage agreement acceptable? Who may carry outsalvage operations?No mandatory form of salvage agreement currently exists in the UAEand since freedom of contract is widely acknowledged, any form ofagreement can be utilised (including LOF). Any ship may carry outsalvage operations.Ship arrest20 Which international convention regarding the arrest of ships is in forcein your jurisdiction?Neither of the conventions are officially in force in the UAE. Howeverthe UAE Maritime Code does contain a section on ship arrestbased on the provisions of the 1952 convention.21 In respect of what claims can a vessel be arrested? In whatcircumstances may associated ships be arrested?The grounds of arrest which are largely based on the claims set outin Article 1 of the 1952 convention. The grounds of arrest under theUAE Maritime Code, set out at article 115 include the followingclaims:• damage caused as a result of a collision;• death or personal injury;• salvage;• contractual claims;• loss or destruction of goods onboard the vessel;• general average;• towing or piloting;• building, repairing or supplying vessels and the costs ofdocking;• disbursements spent on account of the vessel or shipowner;• crew wages;• disputes over the vessel’s ownership;• disputes concerning joint ownership; and• marine mortgages.All of these claims are referred to as ‘marine debts’. Article 116(1) inaddition permits the arrest of a sister ship owned by the debtor at thetime the debt arose save that where the claim concerns disputes overownership, joint ownership and mortgages the arresting party is onlyentitled to arrest the vessel to which the debt refers. Mere associatedship arrests are not permitted under the UAE Maritime Code.In theory, at least, the UAE courts ought only to grant an arrestif it has jurisdiction on any of the following bases:• the arresting party’s usual address or office is in the UAE;• the marine debt originated in the UAE;• the marine debt arose during a voyage when the vessel wasarrested; or• the marine debt arose from collision of salvage where the relevantUAE court has jurisdiction to hear the claim or if the marine debtis secured by a mortgage against the vessel.In practice however the UAE courts have allowed vessels to bearrested in the UAE merely on the basis of the vessel’s presence inUAE waters.22 What is the test for wrongful arrest?In some Emirates, as a condition of granting an arrest, the court willrequire the arresting party to undertake to indemnify the respondentfor any loss or damage, within the claim amount, and to pay compensationto the court if a final judgment determines that the arrestwas wrongful. While this practice does exist, there is little transparencyas to what constitutes grounds for a wrongful arrest but it isthought that something more than simple negligence is required.In addition to the indemnity undertaking the plaintiff must also,in certain Emirates, undertake to be responsible to the court for thecosts and expenses of maintaining the vessel while it is under arrest.210 Getting the Deal Through – Shipping 2010

Ince & Counited arab emirates23 Can a bunker supplier arrest a vessel in connection with a claim forthe price of bunkers supplied to that vessel pursuant to a contractwith the charterer, rather than with the owner, of that vessel?The UAE courts have previously granted an arrest order for a claimby a bunker supplier for unpaid bunkers. However no express rightto arrest for unpaid bunkers is set out in the Maritime Code and itremains to be seen the extent to which a bunker supplier can maintainan arrest application in circumstances where the bunker supplycontract is with the charterer as opposed to the owner of the vessel.24 Will the arresting party have to provide security and in what form andamount?There are no provisions in the UAE Maritime Code setting out thearresting party’s obligation to provide security in its application foran order of arrest. At the discretion of the judge, the arresting partymay be required to provide counter security. Normally this will takethe form of a bank guarantee. Unless the arresting party agrees, theUAE courts will not accept P&I letters of undertaking as a form ofsecurity.25 Who is responsible for the maintenance of the vessel while it is underarrest?In practice this will be for the account of the arresting party as it mustattach to its arrest application order, an undertaking to be responsiblefor the costs of maintaining the vessel whilst it is under arrest.The undertaking also covers payment of all port fees.Carriage of goods by sea and bills of lading26 Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or somevariation in force and have they been ratified or implemented withoutratification? When does carriage at sea begin and end for thepurpose of application of such Rules? Is your state proposing to ratify,accept, approve or accede to the UN Convention on Contracts for theInternational Carriage of Goods Wholly or Partly by Sea?The UAE is not a signatory to the Hague Rules, Hague-Visby Rules,or the Hamburg Rules. The UAE has not expressed an interest in theRotterdam Rules.International conventions that are expressly incorporated intobills of lading will only be given the force of law in UAE courts ifa translated and certified copy of the convention is provided to thecourt. In practice, this rarely happens due to the expense of havingconventions translated and certified.Whilst the UAE is not a signatory to the above conventions, theUAE Maritime Code borrows largely from the Hague-Visby Rulesand relevantly incorporates, by way of example, the carrier’s obligationto exercise due diligence to make the vessel seaworthy, theHague-Visby force majeure-type defences to the breach of the seaworthinessobligation and package limitation.28 Who has title to sue on a bill of lading?The party named in the bill of lading has rights of suit. Similarly, anyparty that has had the bill of lading legally assigned or endorsed tohim can have rights of suit (article 264, and as confirmed by caselaw). Parties that have copies of the bill of lading and take lawfuldelivery of the goods can also sue on the bill of lading (article 267).29 To what extent can the terms in a charter party be incorporated intothe bill of lading? Is a jurisdiction or arbitration clause in a charterparty, the terms of which are incorporated in the bill, binding on a thirdpartyholder or endorsee of the bill?The charterparty may be incorporated into the bill of lading but onlyif it is expressly incorporated. The terms of the incorporated charterparty will only govern the relationship between the shipper and thecarrier (articles 263(2) and 283).If court proceedings are wrongly commenced, the arbitrationclause will only be enforceable if it is pleaded in the first court hearing.If not, the party seeking arbitration will be barred from seekingto stay proceedings pending the outcome of the arbitration. Jurisdictionwill not be decided as a preliminary issue but as part of afinal judgement, so a jurisdiction issue will probably not be speedilyresolved.30 Is the ‘demise’ clause or identity of carrier clause recognised andbinding?In the UAE freedom of contract is widely acknowledged, and a clausethat has been freely agreed to between both parties will be recognisedby the UAE courts.31 Are shipowners liable for cargo damage where they are not thecontractual carrier and what defences can they raise against suchliability? In particular, can they rely on the terms of the bill of ladingeven though they are not contractual carriers?Generally, shipowners will not be liable under UAE law if they arenot the contractual carriers. However, if the damage is due to a faultin the vessel the shipowner may be added as a co-defendant by thecargo owners in proceedings for the damaged cargo.32 What is the effect of deviation from a vessel’s route on contractualdefences?In voyage charterparties, the sub-charterer or shipowner is responsibleto the charterer in circumstances where proceeding to the namedport is an impossibility and the charterer is not given specific instructionsfrom the sub-charterer or shipowner as to where to go. Thesub-charterer or shipowner is liable for ‘freighting the goods’ to thenamed port (article 240).33 What liens can be exercised?27 Are there conventions or domestic laws in force in respect of road, railor air transport that apply to stages of the transport other than by seaunder a combined transport or multimodal bill of lading?There are no rail roads in the UAE. The UAE is therefore not a signatoryto any international rail conventions.In respect of liability during the road and/or air transport undera multimodal bill of lading the relevant law is articles 272 to 370of the UAE Commercial Transactions Law. This sets out the detailsrequired in the ‘carriage contract’, the rights and obligations of eachof the carrier and the sender, and responsibility of the carrier in circumstancesof damage or delay to the goods.Liens can be exercised against the property of the debtor. Withregards to maritime debt, liens can be exercised by operation of lawthrough an application to the urgent matter judge for an order toarrest (article 115).If the contract provides for the ability to exercise a lien, it is stilladvisable to obtain an order to arrest to ensure the arresting party’slegal right to arrest before the courts.34 What liability do carriers incur for delivery of cargo without productionof the bill of lading and can they limit such liability?In delivering the goods without the production of the bill of ladingthe carrier is in breach of article 267 and 269 of the UAE Maritimewww.gettingthedealthrough.com 211

United Arab Emiratesince & CoCode. UAE law is not explicit in setting out the liability that carriersincur in the event of delivery without production of the bill oflading.Article 269 provides for a mechanism of applying to the court toappoint a third party to hold the goods in the event that no one withthe bill of lading requests delivery.It is not certain, but the better view is that delivery without thebill of lading will subject the carrier to liability the equivalent of themarket value of the goods delivered at the time of delivery.Whether carriers can limit their liability in respect of deliverywithout a bill of lading will depend on the terms of the bill of ladingand any incorporated charterparty.35 What are the responsibilities and liabilities of the shipper?The shipper is responsible for providing accurate information aboutthe goods to be shipped and entered in the bill of lading (article259(4)). The shipper is also responsible for signing an original bill oflading for retention by the carrier (article 262(2)) and for providingthe carrier with the following details about the goods:• the principal characteristics;• the number of cartons, pieces, quantity, and weight; and• the visible condition of the goods to be shipped, in writing (article258(2)).Jurisdiction and dispute resolution36 Which courts exercise jurisdiction over maritime disputes?There is no specialist maritime court. All claims are initially heardby the UAE Court of First Instance in the Emirate concerned. Claimsthat do not exceed 100,000 Arab Emirates Dirhams are heard by onejudge. Claims in excess of that are heard by three judges.37 In brief, what rules govern service of court proceedings on a defendantlocated out of the jurisdiction?The claimant submits the claim form into the court and the court isresponsible for notifying the defendant of the claim. This means thatthe court will effect service using a court appointed officer who willseek to serve the documents on the defendants. In cases involvingdefendants based outside of the UAE the court will effect serviceusing diplomatic channels which often leads to substantial delay inthe prosecution of claims against foreign defendants.38 Is there a domestic arbitral institution with a panel of maritimearbitrators specialising in maritime arbitration?There is no recognised arbitral institution in the UAE which specialisesin maritime disputes. There are however, general arbitrationbodies such as the Dubai International Arbitration Centre and theAbu Dhabi Commercial Conciliation and Arbitration Centre in AbuDhabi.39 What rules govern recognition and enforcement of foreign judgmentsand awards?The UAE is a party to the New York Convention on Enforcement ofForeign Arbitration Awards but has yet to formally ratify the conventioninto national law. As a consequence this has caused some confusionin the application of the New York Convention principles andled to some judges insisting that awards produced in signatory countriesbe enforced as though they are foreign judgments per articles235 to 238 of the UAE Civil Procedures Code. The criteria governingthe recognition and enforcement of foreign judgements are:• that the UAE Ccourts did not have jurisdiction in the dispute;• that the foreign court had the requisite jurisdiction under theapplicable international rules to hear the dispute;• that the defendant in question had been summoned to appearand had duly appeared before the foreign court;• that the judgment is final under the law of the court issuing thesame; and• that the judgment does not conflict with any judgment or orderpreviously issued by an UAE court and is not contrary to thepublic morals or order of the UAE.40 What remedies are available if the claimants, in breach of ajurisdiction clause, issue proceedings elsewhere?A foreign jurisdiction clause will not be upheld by the UAE courts ifthe UAE courts deem that they have jurisdiction to hear the case andthat the requirements of article 21 of the UAE Civil Procedure Codeare satisfied, namely:• one of the parties is domiciled in the UAE;• the claim concerns an asset which is located in the UAE;• the claim concerns a contract under which the contractual obligationshould have been or was performed, concluded, executed,completed or relevant payments were made in the UAE;• the claim is in respect of insolvency, which has been declared inthe UAE;• the claim is against a UAE national or expatriate who is domiciledin the UAE; and• the claim concerns a party who is employed in the UAE.The defendants may, therefore, issue their own proceedings in theUAE if, in breach of the jurisdiction clause, the claimants issue proceedingselsewhere.41 What remedies are there for the defendant to stop domesticproceedings that breach a clause providing for a foreign court orarbitral tribunal to have jurisdiction?If the contract contains an arbitration clause it is not permissible toproceed with a claim in a UAE court provided a party raises at thefirst hearing the fact that the court proceedings were commenced inbreach of the arbitration clause. If such objection is raised the courtshould stay the court proceedings. If however no objection is raisedat the first hearing the arbitration clause is deemed cancelled.If the contract provides for a foreign court to have jurisdiction,the UAE courts will nonetheless hear the case if the provisions ofarticle 21 of the UAE Civil Procedure Code is satisfied (see question40) so exclusive jurisdiction clauses are not really exclusive in theeyes of the UAE court, if on their own rules of procedure they havejurisdiction in a dispute.Limitation periods for liability42 What time limits apply to claims? Is it possible to extend the time limitby agreement?Claims arising from charterparties must be brought within one yearof the date of termination of the charterparty (article 224 (1)).Claims relating to reclamation must be brought within one yearof the supplier being aware of his right to claim (article 224(2)).Claims arising from hidden defects pursuant to a ship buildingcontract must be brought within one year of learning of the defect(article 68(1)).Claims regarding priority rights of a vessel must be broughtwithin one year. But claims regarding priority of rights guaranteeingsupply debts must be brought within six months (article 93 (1)).Time periods are extendable to three years and shall commence inaccordance with article 93 (2):• for claims guaranteeing aid and rescue remuneration – with effectfrom the day when the operations were concluded;212 Getting the Deal Through – Shipping 2010

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